Finance chief raises doubts over borrowing cap opportunity

CAMDEN’S finance chief has poured cold water on the idea that Theresa May’s pledge to lift borrowing restrictions will trigger a wave of new council house-building.

Labour councillor Richard Olszewski told Monday’s full council meeting that the lifting of the cap for local authorities was so far “one line in a prime minister’s speech to party conference” and no further detail had yet been provided.

His comments came after Mrs May announced at last week’s Conservative Party conference that she was ready to relax the rules and allow councils to borrow against their assets – a move which Labour campaigned for before last year’s general election as a strategy for easing the housing crisis.

Locally, the Tories have said this leaves “no excuse” for local authorities to build more homes, although did so with the warning that Camden should monitor how much money is spent on construction costs. Labour has previously suggested the building of up to 5,000 homes may have been prevented by government rules and regulations.

Cllr Olszewski was full of caution on Monday. He said: “Whilst it is good that the borrowing cap is proposed to be lifted, and that potentially gives us greater flexibility in what we can do with our investment in council housing, it’s important to note it’s only one line in a prime minister’s speech to party conference. To quote the old cliche, the devil is in the detail.”

The Conservatives listen to Richard Olszewski at the council meeting

He added: “The key point, however, is that ‘yes, it’s great to be able to borrow’ but that comes at a cost. It’s too early to say how much extra we might be able to borrow, but say for instance we had room to borrow about another £50million on current public works loans board rates that may be available to us, the cost to us – to the housing revenue account per year – might be about £1.35m. How is that going to be financed? A further increase in council rents?”

Councillor Oliver Cooper, the leader of the Conservatives, said last week that Mrs May’s lifting of the cap “could be a seismic shift in housing and will kickstart a council house-building revolution”. He added: “More than half of councils identify the housing debt cap as the top reason they’re not building more homes and now they have no excuse.”